Azernews.Az

By Sara Israfilbayova

Azerbaijan intends to increase the share of insurance fees in the country’s non-oil GDP.

Executive Director of the Financial Markets Supervisory Authority of Azerbaijan (FIMSA) Ibrahim Alyshov made the remarks at the conference “Insurance in Azerbaijan: New Prospects” on June 20.

He went on to say that the main goal is to bring the share of insurance fees in non-oil GDP to eight percent.

“Currently, this share is only 0.8 percent. Our strategic goal is to increase this figure to eight percent. In particular, by the end of 2018, we intend to increase the share of insurance fees to 1.4 percent,” Alyshov said.

Alyshov noted that according to the data, as of the end of May, insurance fees in Azerbaijan reached almost 351 million manats ($206 million), which is 46.1 percent more than in the same period last year.

“Thus, we can say that the insurance market of the country continues to grow. Out of the total amount of fees, 73 percent or 255.4 million manats ($150.23 million) fall on voluntary insurance, 27 percent or 95.4 million manats ($56.11 million) on compulsory insurance. I would like to note that life insurance takes a large share in the fees for voluntary insurance, the fees for which amounts to 138 million manats ($81.18 million),” the Executive Director of the Chamber said.

He noted that another task is to increase the share of the insurance sector assets in the total assets of the financial sector.

“In recent years, we have not been able to increase the share of insurance market assets in the total volume of financial assets. This figure does not exceed two percent. This year, it has again decreased slightly. Although at the end of last year the assets of the financial sector amounted to 1.76 billion manats ($1.03 billion), in the first five months of 2018 they decreased to 1.11 billion manats ($652.9 million),” Alyshov said.

Further he underlined that a new draft law on the promotion of agricultural insurance can be adopted before the end of the year, adding that the draft law has already been prepared and sent to the government.

“The draft law is fully ready and is under consideration. I hope very much that the Parliament of the country will approve the new law before the end of 2018,” Alyshov stressed.

At present, the law “On assistance to and development of agriculture in Azerbaijan” in force in Azerbaijan regulates state financing of agricultural insurance premiums. In addition to wheat, the list of crops insured at the expense of the state budget, includes barley, corn, sunflower, potatoes, sugar beet, etc.

The average tariff for agricultural insurance in Azerbaijan is about 1,500 manats ($8,800) per year (five percent per hectare), despite the fact that the average profit per hectare of land is about 25,000 manats ($14,700) per year.

FIMSA announced that, fees on the agricultural insurance market amounted to 1.56 million manats ($917,600) in 1Q2018, with payments of 282,900 manats. A large part of the fees and charges in this area fell on the insurance of livestock making up 947,700 manats ($166,400).

In turn, Ziyad Samadzade, Chairman of the Committee on Economic Policy, Industry and Entrepreneurship stressed that Azerbaijan can significantly increase the fees for real estate insurance.

“According to our calculations, the modernization of the accounting system will increase the fees for real estate insurance by 200-300 million manats ($117.64-176.47 million). The share of fees from real estate insurance is 20 percent of the total fees in neighboring countries,” said Samadzade.

Voluntary and compulsory real estate insurance is in effect in Azerbaijan today. The fees for voluntary property insurance at the end of May amounted to 27.79 million manats, or $16.35 million, (7.9 percent of total fees), and on compulsory insurance was 12.17 million manats, or $7.16 million (3.5 percent of fees on the market).

The conference “Insurance in Azerbaijan: New Prospects” started in Baku on June 20.

Experts and insurers from Azerbaijan, Russia, Poland, Turkey, Czech Republic, Germany, Ukraine, Romania, UAE and the Netherlands take part in the event.

The conference participants will discuss macroeconomic trends and their impact on the insurance sector of the region, microinsurance and its prospects in Azerbaijan, digitalization and development of new drivers of growth of the insurance sector, experience of different countries in agricultural insurance and other issues.

Currently, 21 insurance companies are implementing their activities in Azerbaijan.

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Sara Israfilbayova is AzerNews’ staff journalist, follow her on Twitter: @Sara_999Is

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